Australian government delays first payment of $4.6 billion bank tax

A Commonwealth Bank of Australia logo adorns the wall of a branch in Sydney, Australia

SYDNEY (Reuters) – The Australian government has delayed the date of the first payment of its A$6.2 billion ($4.60 billion) bank tax by three months and excluded some liabilities from the levy, according to proposed legislation released on Tuesday.

The legislation did not include any sunset clause, which had been sought by the banks given the government had justified the tax as being necessary to help bring the federal budget back into a surplus by the financial year ending June 30, 2021.

The six basis points levy on bank liabilities is designed to raise about A$1.5 billion a year from the five biggest banks – Commonwealth Bank of Australia <CBA.AX>, Westpac Banking Corp <WBC.AX>, Australia and New Zealand Banking Group <ANZ.AX>, National Australia Bank <NAB.AX> and Macquarie Group <MQG.AX> – over the next four years.

“This represents a fair contribution by the banking sector to the Australian community and contributes to a long-term balanced budget,” Treasurer Scott Morrison said in a speech to parliament on Tuesday.

The first payment covering the half-year ending Dec. 31 will now be due in March to give the banks a transitional period. The banks have said the cost of the tax will be borne by their customers and their shareholders.

Australian Bankers’ Association Chief Executive Anna Bligh said the banks welcomed concessions that excluded derivatives and money held with the Reserve Bank of Australia, but they still felt the tax was “poorly-designed”.

“There needs to be further consideration of a sunset clause to limit this tax on the banks to the time where the budget repair job needs to be done,” she told reporters.

The S&P/ASX 200 Financials index <.AXFJ>, which includes the major banks and represents 31 percent of the benchmark index, has fallen by 4.8 percent since the tax was announced on May 9. The benchmark S&P/ASX 200 index <.AXJO> has declined by 2 percent over the same period.

Shares in all five of the banks affected by the tax were trading higher on Tuesday.